Hong Kong-Australia: Virgin Australia enters with HNA alliance, but traffic rights unlikely to grow

Premium Analysis

Virgin Australia's entry into Hong Kong marks a significant expansion for its strategy and partnership with China's HNA Group. The growth also raises the matter of the Hong Kong-Australia air service agreement.

Hong Kong has exhausted its traffic rights to primary Australian cities and has sought more. Australia, however, has used only half of its allotment, not needing to expand the agreement and receive more traffic rights. Australia has sought other growth mechanisms to transform Hong Kong into a hub for Australian operators in the way that Singapore and Dubai have done.

Hong Kong has protected its geographical opportunity and not given Australia other rights. A stalemate has ensued. Virgin Australia's entry, however, means that Australia will use its traffic right allotment faster, accelerating the window for an air service agreement expansion.

Australia argues that, following its liberalised agreement with mainland China, Hong Kong – under a separate aviation framework – should logically follow suit. Despite the seeming similarities, they are two different markets. Ignored from both sides is what the broader market – and not a specific hub – would gain through liberalisation.

Become a CAPA Member to access Analysis Reports

This CAPA Premium Analysis Report is 2,118 words.
Become a CAPA Member

Our Analysis Reports are only available to CAPA Members. CAPA Membership provides exclusive access to in-depth insights on the latest developments in the aviation and travel industry, developed by our team of dedicated analysts located in Europe, North America, Asia and Australia.

Each report offers a fresh perspective on the latest industry trends and is available online or via the CAPA mobile app, with customisable alerts to help you stay informed and identify new business opportunities.

CAPA Membership also provides access to our full suite of tools, including a tailored selection of more than 1,000 News Briefs every week and comprehensive data and analysis on thousands of companies around the world.